Oil prices increased Wednesday on optimistic forecasts of fuel demand recovery ahead of the summer driving season and the projected fall in US crude inventories.
International benchmark Brent crude was trading at $72.59 per barrel at 06.07 GMT for a 0.5% rise after closing Tuesday at $72.22 a barrel.
American benchmark West Texas Intermediate (WTI) was trading at $70.46 a barrel at the same time for a 0.6% increase after ending the previous session at $70.05 per barrel.
Despite rising COVID-19 case counts in some countries, particularly India, the US Energy Information Administration (EIA) said global oil demand remained higher than supply in May, contributing to continued global withdrawals from inventories of crude oil and petroleum products. The EIA's optimistic demand data ahead of the summer driving season supported the upward price trend.
The Administration also revised up its forecast for global crude oil prices for 2021 and now international benchmark Brent crude is estimated to average $65.19 per barrel in 2021, up from last month’s forecast of $62.26 a barrel for this year.
The American Petroleum Institute's crude stocks forecast also supported the predictions. The Institute forecasts that a fall in crude stocks of 2.1 million barrels for the week ending June 4.
The forecast of a large inventory draw signals a recovery in crude demand in the US, easing investor concerns about declining demand and supporting prices. The EIA's crude oil inventory data is due out late Wednesday.
The US Secretary of State Antony Blinken's comments on the ongoing talks between the US and Iran for reviving the nuclear deal, officially known as the Joint Comprehensive Plan of Action (JCPOA), also relieved investor concerns on oversupply from the possibility of the return of Iranian crude to the market.
Blinken anticipated that "even in the event of a return to compliance with the JCPOA, hundreds of sanctions will remain in place, including sanctions imposed by the Trump administration.
If they are not inconsistent with the JCPOA, they will remain unless and until Iran's behavior changes."
By Ebru Sengul Cevrioglu